A Brief History Of Legal Risk Management
Each institute is dedicated to the discipline of handling legal and liability risk and some are professionally accredited. They conduct educational activities, publish research and organize forums for members to share experiences and expertise. These institutes play a critical role in educating businesses and establishing best practices for the management of legal and liability risk.
Legal and liability professionals play a vital role in the future of their companies by ensuring the corporations are aware of— and educated on— the current state of the law . They must ensure that employees and company leadership are cognizant of any changes in the law that could imply an expanded risk. They also are responsible for proactively managing the company’s exposure to legal and liability risk by implementing processes to alter behavior as necessary. Too often companies only react to legal risk by responding to claims made against them. By operating reactively, companies put themselves at risk of higher claims costs, increased litigation expenses, and a much greater likelihood of a fine or judgment.
Defining a Liability Risk Management Institute
A liability risk management institute is an organization that provides professional expertise and services to aid in the prevention or mitigation of claims against its members. It seeks to protect and support groups of risk-bearing entities who, through insuring their own liability, can provide insurance more efficiently than through the commercial insurance market. An institute is typically formed by the members of a particular industry or profession that face similar types of liability claims, which often overlap in terms of the applicable law, the nature of the liability, and exposure to similar types of claims. Members generally include organizations such as community hospitals, healthcare systems, not-for-profit entities, municipalities, counties, or public authorities, and most commonly serve the medical malpractice, healthcare, higher education, manufacturing and public sectors.
By pooling risk and acting as the insurers for entire classes of entities, institutes seek to minimize claims through consultation and training programs. These programs are designed to address areas of the law that could result in claims or litigation, as well as to allocate resources to investigations of claims that are received, and to defend those claims that are otherwise appropriate to defend. The field and scope of their coverage may be wider than other forms of insurance, extending beyond basic liability insurance to include defense of board members and officers as well as employee benefits claims. Each institute retains the discretion to award legal costs and expenses through subrogation recovery, mediation or direct indemnification.
Advantages of Belonging to a Risk Management Institute
In addition to the information provided in their publications, legal and liability risk management institutes offer a wealth of knowledge, experience and professional contacts that are invaluable to businesses and professionals seeking to advance their understanding of the most rigorous standards of practice and risk management. In addition to being a significant source of education and entertainment, networking allows a group of people to support a common interest. The benefits of this can be enormous to businesses that require a low-risk culture and need to minimize costs and maximize safety.
The most apparent benefit of networking is that it is an opportunity for people to learn from each other. For example, similar types of businesses are able to learn from one another and provide insight into risk management strategies and preventative measures. This is essential for identifying potential liabilities that providers or companies may have overlooked or been unaware of. Encouraging an open dialogue helps businesses build a network of valuable contacts in their field that they can share information with. Additionally, networking can identify problems that are unknown to those in the middle of the dilemma or predicament.
Networking events also provide companies looking to develop infrastructure to set up what needs to be done in the future. Many groups offer training sessions or seminars that help businesses plan ahead, as well as provide a schedule of events that can help alleviate future problems. For instance, groups may have speakers come in regarding a problem that they have already overcome. A business in need can then receive answers to their problems through formal presentations, informal conversations or direct interaction. Additionally, a sense of comradery is developed amongst businesses facing a common problem, which can help to unify them when it comes to overcoming obstacles.
Finally, networking within the proper circles provides access to a number of key individuals in a field. Whether it is academics, professionals or scientists, outside perspectives have vital insights that can help a business better understand the issue at hand. This knowledge can then be used to develop preventative and remedial measures, as well as to achieve a better overall grasp of the situation.
Focus Areas for Risk Management
A legal and liability risk management institute will often focus on the organization’s overall risk profile rather than on issues at an individual facility, which can lead to improved risk management. The key areas of focus for a risk management institute include compliance, litigation prevention, and crisis management strategies.
Compliance
While there are a number of laws that dictate how healthcare facilities and clinical laboratory facilities must operate, there are few regulations that specifically target the individual facility or laboratory. Failing to meet the requirements dictated in these laws, however, can result in costly fines. Some legal and liability risk institute groups have focused on helping to ensure that their partner facilities have the necessary safeguards in place to meet the requirements of the HIPAA Privacy Rule and the Clinical Laboratory Improvement Amendment. Failure to meet the standards imposed by these laws can result in civil fines as high as $1.5 million for HIPAA violations, or in the loss of all Medicare and Medicaid funding for laboratories that are found to have violated CLIA standards. The proactive role that many legal and liability risk management institutes play on ensuring that their partner facilities are compliant with these and other laws can save these facilities hundreds of thousands of dollars in fines over the course of a year.
Litigation Prevention
In some cases, litigation may not be avoidable. Having an active litigation prevention plan in place can help to ensure that all litigation is handled properly and that the facility is not subjected to unnecessary damages. Legal and liability risk management institutes help their partner facilities develop a litigation prevention plan by ensuring that the facility has adequate insurance coverage in place, that the facility’s corporate structure is designed to limit liability, and that the facility has planned for what to do in the event of a lawsuit (often known as a crisis management plan). For example, it is critically important that all employees know who to contact in the event of a lawsuit or report of noncompliance. Often, the strongest case against a facility is brought by a former employee or patient. Because these individuals are unhappy with the facility, they are unlikely to communicate the details of a potential lawsuit to the facility proactively. It is only when the facility learns about the potential lawsuit through an informal source (such as the disgruntled former employee or patient) that the facility will have an opportunity to prevent a lawsuit from being filed. Having a crisis management plan in place that includes a clear chain of command for reporting potential lawsuits, or other litigation, means that the facility will have the chance to settle any potential lawsuit before it becomes a reality.
Programs and Certification
Legal and Liability Risk Management Institutes (LLRMI) are dedicated to advancing the practice of risk management through postgraduate training and education, and provide a number of programs that have been instrumental in enhancing the credentials of risk management experts. LLRMI is best known for its risk management certification programs, all of which require both written examinations and successful completion of practical workshops.
The Certified Risk Management Professional (CRMP) program, which was launched in 2005, is available to attorneys and insurance , human resources and risk management professionals with a minimum of 10 years’ work experience. The CRMP is considered to be the highest credential available for an expert in risk management, though it has been criticized for being too narrowly focused on practices and issues specific to the legal profession.
A more broadly focused alternative is the Professional in Risk Management (PRM) credential. Launched in 2011, the PRM designation is built to recognize risk management expertise not only in law but also in other fields such as insurance, finance, human resources, accounting, health care, nonprofits, and government and would be equally available to people in all of those professions, regardless of their specialty.
Applications and Case Examples
In the 1980s, a major healthcare organization had been positioned as a vanguard of the integrated delivery systems movement. In this case study, we see how a legal and liability risk management institute that involved multiple stakeholders provided outcome-based solutions that guided the organization through a tumultuous time.
In the 1980s, when the HMO concept was relatively new to senior executives in hospitals and health systems, several HMO executives were invited to meet at one of the health systems to explore strategies to deal with the challenges they and others anticipated for their new product line. A legal and liability risk management institute regarding strategic product risk was developed, inviting executives from provider organizations and payers to explore and discuss potential risks and their solutions. As a result of the first institute, a book on professional managed care advice was developed for medical malpractice risk management.
In 1990, the legal and liability risk management institute evolved into strategy risk thinking in its domain of application domain. Fifteen years later, the strategy risk thought leadership was demonstrated again when a number of group medical malpractice insurers decided to have a captive insurance fund to deal with the higher risk of volume of lawsuits. The institute brought together the medical malpractice insurers and defense experts in an effort to analyze and determine if there were any practical risk management strategies to reduce the costs of defending their insureds who were in the highest risk tier. Several of the practical strategies were followed.
At the same time, there was a growing evidence base that strategies to reduce malpractice lawsuits in medical practices was possible, particularly at the level of the individual physician. Strategies included better command and control, understanding of the market where the facility is located, understanding the expectations of the local community, improving access and continuity of care, enhancing the transparency of information provided to the patient and family, and pharmacy safety. Over 100 articles and books were written on this subject. These proven ideas were incorporated into claims management strategies and clinical practice risk management strategies in a way which appropriately simplified them for people doing the management.
Selecting the Best Possible Institute for You
When considering which legal and liability risk management institute (LLRMI) to attend, it is important to evaluate the program’s accreditation status, curriculum content, faculty experience, and trainer-to-trainee ratio. Additionally, an astute virtual attendee can gauge the pedagogical quality of a virtual program by assessing whether the program includes videos of speakers alongside appropriate slides, as well as whether it is organized, clear, and relevant.
Accreditation is an essential qualification. The absence of an official certificate of accreditation should raise a proverbial red flag. In most Illinois courts, for example, only a board certified or accredited LLRMI is permitted to testify about negligence in a medical malpractice case or other related personal injury litigation. Merely attending a program, even one in higher education, does not guarantee accreditation. On the other hand, just because a program is accredited does not necessarily equate to high quality programming.
To assess quality, potential virtual attendees should review LLRMI curriculum materials such as brochures or websites. While no accredited program can guarantee superior quality, a program’s curriculum should indicate its relevant, practical, and realistic focus. Ethics and professionalism, for instance, are important elements that a high quality program will emphasize. Poor quality programs, in contrast, are often little more than impressive brochures or gallant training marketing materials.
In addition, in selecting an LLRMI, potential attendees should be mindful of the number of attendees per program and balance this against their own learning styles. Generally, smaller class sizes enhance the quality of an LLRMI; as many seasoned attorneys know, the most significant learning experiences tend to occur in smaller groups. While learning may not occur in the same way across all generations, most subscribed to the notion that, in the end, it is not the theory of law that makes the difference in litigation results, but rather practical applications obtained through hands-on experience.
The Future of Risk Management
As the landscape of business transactions continues to shift and the complexities of liability risks evolve, the role of legal and liability risk management institutes will adapt and develop in new directions. We will see evolving regulatory landscapes and changes in the way we assess and manage risk in legal contexts.
With the acceleration of legal technology, for instance, will we see an increasing reliance on predictive analytics and artificial intelligence in the future? More companies are turning to AI and predictive analytics when making legal decisions, using algorithms that can analyze data far more quickly than humans and with more accuracy.
There are also indications that we will see more activity in terms of international liability risks as companies continue to do more business abroad and face regulations from countries where they have no physical presence.
Technological advancements may cause concerns regarding ethical considerations and confidentiality. As the risks of cybersecurity attacks become more widely known and the concern for confidential information increases , attorneys may be facing potential liability in a way that has never been exposed before.
In addition, we may expect to see a shift in the procedures for addressing liability issues under existing laws. For example, arbitration has always been a popular option for resolving disputes—will the use of this alternative approach become increasingly attractive to businesses faced with the risks associated with lengthy and expensive lawsuits?
Further, with the advent of new programs and services, and alternative insurance products that are designed for specific risk mitigation, will we see more balancing and collaboration between the insurance industry and law firms?
On a broader level, will we see an increase in the number of opportunities for legal professionals to directly influence legislation and lead to change by attending more industry conferences and participating in more professional organizations and associations?
From predicting future trends to collaborating for the advancement of their field, the legal and liability risk management institutes of today will find ways to grow and further strengthen their roles in the industry.